Top analyst Matt Ramsay at Canaccord continues to see an advantageous gamble when betting on chip giants Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA). While AMD still poses questions as it seeks to bring its road map into reality amid fierce competition and though NVDA may risk share weakness in the short-term on gaming, resulting in a price target cut, the analyst nonetheless is in it for the long-term investment for these two players. Let’s dive in:
Matt Ramsay has a very good TipRanks score with a 68% success rate and a high ranking of #52 out of 4,557 analysts. Ramsay garners 21.8% in his annual returns. When recommending AMD, Ramsay yields 84.0% in average profits on the stock. When suggesting NVDA, Ramsay realizes 125.0%.
Advanced Micro Devices Risk/Reward Tilted Toward Upside
On the heels of AMD’s Ryzen 7 desktop CPUs launch coupled with discussions with CEO Lisa Su, Ramsay chimes in with great confidence on the chip giant- particularly as AMD gears up for its next launch of Ryzen 5/3 CPUs. Therefore, the analyst reiterates a Buy rating on shares of AMD with a $17 price target, which represents a 23% increase from where the stock is currently trading.
Ramsay underscores, “[…] despite the recent stock appreciation and volatility, [we] continue to gain confidence in 1) AMD re-emerging as a competitive second source to Intel (with leadership in several subsegments) with an on-track Zen road map across relevant x86 CPU markets including enterprise/gaming desktops, media-focused notebooks and certain server market segments, 2) gradual GPU unit share recovery in low market tiers with Polaris should be supplemented by the Vega launch in higher-value tiers, and 3) AMD now being focused to deliver a multi-generational road map with the customer backing and foundry partners to sustainably do so. Modest growth assumptions across a $50B+ TAM from very low CPU/GPU share levels today drive our estimates materially above consensus, as much skepticism still remains.”
Overall, “While we recognize road map execution and competitive risks remain, we believe risk/reward is still tilted toward the upside and that our long-term bullish target of $1.00+ in EPS remains attainable by 2020,” Ramsay concludes, anticipating fundamentals can make quite the comeback amid product launch momentum approaching the giant’s Analyst Day next month.
TipRanks analytics demonstrate AMD as a Buy. Out of 19 analysts polled by TipRanks in the last 3 months, 9 are bullish on AMD stock, 9 remain sidelined, and 1 is bearish on the stock. With a loss potential of 19%, the stock’s consensus target price stands at $11.75.
NVIDIA Pullbacks Translate to Buying Opportunities
Long-term, Ramsay is still fully in NVIDIA’s court, backing the chip giant’s striking picture of growth. Yet, short-term pitches a slightly different tale in terms of gaming GPU weakness, leading the analyst reiterates a Buy rating on NVDA while reigning in the price target from $130 to $125, which represents a 23% increase from where the shares last closed.
“[…] we anticipate our positive thesis on NVIDIA will continue to play out with strong gaming GPU growth and new trends including deep learning, virtual/augmented reality, and autonomous driving catalyzing new market growth. However, after almost staggering financial and stock out-performance during C2016, we believe overall revenue and EPS growth and NVIDIA stock performance may plateau near term before re-accelerating in C2018 as we anticipate slower Y/Y gaming GPU growth with tough Y/Y compares and the introduction of new competitive Vega GPU platforms from AMD, a period of increased investment in the business and the one-time impact of the ending Intel royalty payment will all be felt this year.”
“As such, while we believe NVIDIA represents a compelling growth story exposed to several secularly attractive markets and we continue to recommend shares as an overweight holding for long-term investors, we are lowering near-term gaming GPU growth […]” surmises Ramsay, who advises investors to be savvy and buy on share weakness.
TipRanks analytics show NVDA as a Buy. Based on 25 analysts polled by TipRanks in the last 3 months, 13 rate a Buy on NVDA stock, 7 maintain a Hold, while 5 issue a Sell. The 12-month average price target stands at $115.95, marking a 14% upside from where the stock is currently trading.